The post-VY economy

By JEFFREY LEWIS

Posted:
06/19/2014 03:00:00 AM EDT

Shortly after the closure of Vermont Yankee nuclear power plant in Vernon was announced late last summer, we co-founded the Institute for Nuclear Host Communities with UMass Professor John Mullin, and Jonathan Cooper. We had seen from a preliminary survey that very little had been studied about these events and from our observation most nuclear plant closings left the host communities and regions worse off than they had been before the plant was built. That insight plus the realization that there was no shared knowledge about closure negotiations meant every event was essentially brand new; we were not learning anything about a dramatic economic event that will affect more than 60 communities in the next 30 years.

In addition to the nearby closures of power plants in Wiscasset, Maine, Rowe, Mass., and Haddam, Conn., we have examined recent closings in the U.S., Europe (East and West), and Japan. We highlight three key items relevant to Vermont's immediate challenge in addressing socioeconomic losses from the Vermont Yankee closing:

-- Governor Shumlin and Commissioner Recchia worked with Entergy to secure $10 million for economic recovery in Windham County. This significant accomplishment is in stark contrast to negotiations around previous US plant closures. No one else has achieved such a creative result on behalf of the impacted community. This is in itself a significant victory for Vermont, and for Entergy, for both recognizing the need and agreeing to a response.

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-- We have seen that no community anticipates the loss of their nuclear power plant, despite knowing the reactor vessel has a limited life span that reaches a maximum age when there is no choice but to close. Closure seems to surprise communities, whether there is support for nuclear power or opposition, and no community (except Windham County) has tried to prepare itself and its economy for the inevitable socio-economic impact of loss. Even so, Windham County's preparation only started a few years ago. A longer planning horizon would have been far better. The legislature did recognize the Windham County efforts with funds to do planning work; we know now that they funds should have been far larger and the start date far earlier -- and we're better than almost any other community!

-- In the U.S. and worldwide most nuclear power plants are in rural or semi-rural areas, largely based on Nuclear Regulatory Commission siting policy. In the U.S. and Europe many of those communities have been in gentle and general decline for years as jobs and workforce move to more urban areas. This decline is well documented in Windham County. In such communities the nuclear plant can act as an economic "mask," shielding the community from experiencing job and workforce losses in the rest of the economy by importing a highly paid, highly trained workforce that raises average wages, offers unique opportunity to local workforce, and contributes social capital to the region. But when the plant closes the mask is removed and the true condition of the local economy is revealed: an aging population, an undertrained workforce, a shortage of good jobs, and lack of community assets necessary to retain or attract new workers.

The presence of these factors raises substantial questions about the state's proposed strategy to use the $10 million from Entergy to mitigate socioeconomic loss in Windham County by establishing a revolving loan fund. Jobs creation, in this context, requires highly structured, strategic, pro-active work, not passive funding. Simply put, the hollowing out of the local economy behind the nuclear power plant leaves a weakened economy that lacks the fundamental ingredients to generate jobs.

Our experience in Windham County is that entrepreneurial activity is very low. The existing revolving loan funds (Brattleboro, Rockingham, and Connecticut River Valley) are under-used and the quality of applicants is low. Brattleboro Development Credit Corporation for years ran a Business Plan Competition. It attracted an interesting set of applicants. However, aside from the first year's applicants, even the best were destined to be small, low employment and low profit enterprises. Based on this recent experience we know a revolving loan fund is unlikely to draw quality applicants.

Rather, as the regional Comprehensive Economic Development Strategy report (seveds.com/ceds-report) says, a fundamental requirement is creating an entrepreneurial environment that attracts, stimulates, supports, and launches quality businesses. This is very hard work. It takes time, talent, money and an appetite for risk that is rare in public programs. It requires local expertise to coordinate the many components that work together to create rural prosperity, and long-term strategies to replace lost economic activity. The regional CEDS was created through a unique collaboration among regional business leaders with the help of one of the country's top economic development strategists.

Therefore, we would suggest based on our knowledge of the local situation, the global experience, and best practices that the strategy for deployment of these very valuable funds be fundamentally re-thought to drive business creation and support over a long term coupled with a robust workforce training and recruitment program so those new businesses will have people to do the work they create.

Jeffrey Lewis is former director of BDCC and founder of SeVEDS. Jennifer Stromsten is a recent Master's graduate of UMass's Regional Planning Program. Both are co-founders of INHC; he is executive director and she is program director.

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